TripAdvisor (TRIP) Down 49.7% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for TripAdvisor (TRIP). Shares have lost about 49.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TripAdvisor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

TripAdvisor Beats Q4 Earnings & Revenue Estimates

TripAdvisor Inc. reported adjusted fourth-quarter 2020 earnings of 38 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Also, the reported earnings increased 41% from the year-ago quarter.

Revenues in the fourth quarter were $335 million, surpassing the Zacks Consensus Estimate of $332 million. However, the top line was down 3% year over year.

Revenue Segments

Starting first-quarter 2019, TripAdvisor revised the reporting structure into three segments: Hotels, Media & Platform, Experiences & Dining, and Other.

Revenues of $194 million (accounting for 58% of total revenues) from the Hotels, Media& Platform segment were down 6% from the year-ago quarter.

Revenues of $109 million from the Experiences & Dining segment, which accounted for 33% of total revenues, grew 16% year over year. The company will likely continue to invest in supply and marketing to accelerate E&D products, as well as drive attractive returns in the long run.

The Other segment contributed the remaining 9% to total revenues. This segment includes revenues from rentals, SmarterTravel, Flights/Cruise and TripAdvisor China. Revenues from this segment were $32 million, down 30% from the year-ago quarter.

Operating Results

TripAdvisor’s adjusted operating expenses of $258 million were down 5.5% from $273 million a year ago. Per the press release, operating margin of 6% was also down 40 basis points from the year-ago quarter.

On a GAAP basis, the company’s net income was $15 million or 11 cents per share versus $7 million or 5 cents in the prior-year quarter.

Balance Sheet & Cash Flow

TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $319 million, down from $933 million recorded in the third quarter. Accounts receivables were $183 million, down from $218 million in the third quarter.

Cash flow from operations was $59 million versus $1 million in the third quarter. Capex was $22 million, down from $23 million in the third quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -31.92% due to these changes.

VGM Scores

At this time, TripAdvisor has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TripAdvisor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.